Supply Chain Shortages: Why They Happen and What You Can Do

If you’re sick of hearing about supply chain shortages, you’re not alone. Pandemic-related shortages made headlines in 2020 and 2021; even in 2022, more than four in five organizations experienced at least one supply chain disruption.

Now, the manufacturing and logistics industries have largely recovered from the global supply chain crisis that occurred during the height of the pandemic. Still, you may be wondering how your business should respond when faced with a shortage. Read on to find out more about supply chain shortages, and how your business can respond to disruptions to stay ahead of the game.

What Causes Supply Chain Shortages?

Supply chain shortages can result from a variety of factors:

• Disasters: As we saw during the height of the COVID-19 pandemic, major global events can disrupt supply chains in a major way. Natural disasters can have the same effect, impacting everything from production to transportation, thereby creating shortages.
• Raw material shortages: Logistics experts know that even the smallest component is crucial to the success of a product. A shortage of raw materials — caused by anything from production issues to a sudden spike in demand to geopolitical conflict — can create a major manufacturing backlog, disrupting the entire supply chain.
• Transportation issues: Transportation infrastructure issues like trucking delays slow down the movement of goods, making it harder for manufacturers to get the parts they need.
• Inventory mismanagement: While many supply chain shortages are unavoidable, some shortages are caused by inefficient inventory management practices. Poor practices like inadequate forecasting or inadequate warehousing can exacerbate supply chain issues, making manufacturers less resilient.

Addressing Supply Chain Shortages

So, what can manufacturers do? Fortunately, there are a number of steps that can help reduce the impact of supply chain shortages:

• Diversification: Do you rely heavily on a single supplier? That’s a red flag. Consider diversifying your sources for raw materials, components, or parts to mitigate risks associated with disruptions at any one supplier. Having two or more sources of supply reduces the chance that your business will be dramatically impacted.
• Supply chain visibility: Manufacturers should have eyes on their entire supply chain. Fortunately, recent technological advancements make this easier than ever before. Consider investing in supply chain management technology — Internet of Things (IoT) sensors, for example — for real-time monitoring to help identify potential bottlenecks. The faster you identify an issue, the faster you can respond.
• Strategic positioning & nearshoring: The closer your inventory is to key markets, the shorter your lead times will be. Consider using centralized production and warehousing facilities to reduce any supply chain shortages caused by transportation snafus. In addition, nearshoring, or shifting your manufacturing and production to the USA, is an excellent way to reduce supply chain issues, lower transportation costs, and deliver your products faster.

 

How Logistics Management Can Mitigate Supply Chain Issues

When in doubt, ask the experts. Working with external logistics experts can help improve your response to supply chain issues, making your operation more resilient and improving customer satisfaction.

A third-party logistics provider can offer the following services to address supply chain challenges:

• Warehousing and distribution: External logistics experts can work with you to develop a strategy for centralized warehousing, improved transport routes, and other best practices to reduce the impact of supply bottlenecks.
• Risk management: Logistics management means expecting the unexpected. A third-party logistics provider can help anticipate and mitigate risks to your business throughout the supply chain, developing contingency plans based on years of experience and data analysis.

Ultimately, an external logistics expert can help anticipate supply chain issues you might have missed, leaving you to focus on what matters: building your business.

Related Post: Case Study | Keep North America Running 

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If you’re ready to build a resilient, agile, and competitive business, logistics managers like NewStream can help. Want to take a proactive approach to supply chain shortages? As a 3PL with over 30 years in comprehensive assembly and logistics management, NewStream has the expertise and foresight to keep your business running smoothly. With our unique industry insights, we can help you stay two steps ahead of your competitors — no matter what the supply chain throws your way.

Want to hire experts to handle your supply chain logistics? Contact NewStream today!